As all of our primary casualty insurance programs are unbundled for claims and loss control, we regularly see insureds that want to make a change in their third party claims administrator (TPA). Such changes occur for a variety of reasons, including service issues, cost implications, adjuster technical expertise, demographics, and change in the needs of the insured. The process of selecting and changing TPAs can be demanding with many issues to consider, including the right service fit, transition timelines, contractual commitments, and regulatory implications.
Once a decision is made to change TPAs and a new one is selected, how does an organization ensure a successful transition? Given the complexity, it’s important that the insurer is made aware of potential TPA changes as early in the process as possible. It’s also important to take the time to get it right. Consider the following list as a good starting point for planning the transition.
Prompt notice of the intent to change allows the insurer to give notice of cancellation to the incumbent TPA as required by contract, if applicable.
The new TPA’s claim service team needs to be identified and introduced to the operational parties of the insured and the insurer.
The claim service instructions need to be developed identifying the parties and contact information, outlining the expectations as agreed upon by the insured and TPA which will serve as a reference document for the TPA’s adjusters. These instructions should be thorough and detailed.
The insurer will need to provide the new TPA with reporting criteria and instructions for individual claim reports. These instructions are typically incorporated into the TPA service instructions.
Establish the date the new TPA will handle claims. Regardless of the selected start date, using the date of loss rather than the date a new claim is reported tends to lead to less confusion, which is especially true if open claims are not moved to the new TPA.
Establish banking arrangements and imprest accounts for the payment of claims must be in place.
If open claims are moved to the new TPA, develop a process for notification to all affected parties. For example, claimants must be advised of the contact information for the new adjuster and medical providers. Returned bills lead to payment delays, frustration, and complaints.
Continue to monitor claims closed by the previous TPA. For reopened claims, a plan must be in place to identify a reported but closed claim, access the claim file information, and resume handling by the new TPA.
Each transition is unique and requires its own distinct set of challenges. While strong communication and coordination with all parties is critical, with proper planning and a strong RFP, the transition should go smoothly.
Another major concern in changing TPAs is the conversions of claims data from one TPA to another. Look for Part II of our “Changing TPAs” series, where we’ll detail specifics for a successful transition of claims data from one TPA to another.
The ORRM Claims Department contributed to this article.
The Underwriting Consultant Group provides in-house technical underwriting support for Old Republic Risk Management. The group is responsible for setting and communicating underwriting guidelines for the company, working closely with the Product Development and Compliance Department. The Underwriting Consulting Group is based out of the corporate offices in Brookfield, Wisconsin.